ZAANDAM, Netherlands -- Ahold, which has spent much of the last two years selling its supermarkets, jumped back into the buying game by announcing intentions to purchase the 67-store Julius Meinl chain in the Czech Republic.
Anders Moberg, Ahold's president and chief executive officer, called the move "a milestone in our recent history."
The purchase would be Ahold's first major acquisition since undertaking a restructuring program following a 2003 accounting scandal. The company has sold hundreds of stores and exited numerous markets as part of its "Road to Recovery" plan. The disposition program has raised more than $3.1 billion so far.
"We are nearing the successful completion of our divestment program and are now growing the business in key markets through selective acquisitions," Moberg said in a statement.
The deal, which calls for Ahold to acquire "up to" 67 Czech supermarkets operated by Julius Meinl, is subject to closing conditions and antitrust approval and is expected to close later this year. The purchase price was not disclosed. Julius Meinl had about $173 million in sales in 2004, Ahold said.
Ahold said it would rebanner the Meinl stores to Albert, the banner under which Ahold operates supermarkets in its Central Europe division, which includes the Czech Republic, Poland and Slovakia. The acquisition would increase Albert's presence in the Czech Republic to around 250 stores, and increase to 520 the number of its stores in Central Europe.
Ahold noted earlier this month that "fierce price competition" in Central Europe had lowered average basket sizes there and led to a comparable-store sales decline of 5.1% during the second quarter.
Ahold has been active in the Czech Republic since 1991, and in 2003 it combined the operations of its Czech, Slovakia and Poland operations in a single division based in Prague. The division reported 2004 sales of around $2 billion.
Julius Meinl is operated by an Austria-based holding company. In addition to 67 supermarkets, it operates a coffee-roasting plant and a coffee and tea distribution business. It employs around 1,700 people.
Separately, Standard & Poor's raised its long-term corporate credit rating on Ahold from "BB" to "BB+" and raised its debt rating on its senior notes to "BB" from "BB-." The rating agency cited lower debt levels and an improved financial profile.
In a report, Paris-based S&P analyst Nicolas Baudouin said ratings could be upgraded to investment grade if Ahold further improves its earnings to debt levels and if the challenging environment for retail in Ahold's core Netherlands and U.S. markets improves.
